Byron Bay is now the most expensive place in Australia to purchase a house, and locals who did not buy before the boom face the prospect of being forced out of the northern New South Wales tourist mecca.

Key points:

Byron Bay has overtaken Sydney as Australia's most expensive place to buy a house

The Mayor says the boom is putting pressure on the socially disadvantaged

Lifelong locals say they are struggling to keep a foothold in their town

A recent nationwide analysis showed the median Byron house price was more than $987,000, putting it ahead of Sydney, at $950,000, while Melbourne ranks sixth at about $772,000.

Report author Simon Pressley, from Propertyology, said the Byron bubble was refusing to burst.

"Sydney's had two booms in 30 years, and they typically last between two and four years," Mr Pressley said.

"So if we're having this discussion about any location other than Byron, I'd say [because] it's gone strong for five years, it must be really close to the end.

"But the median house price average annual increase over 20 years in Byron has been 10.1 per cent — so it's sort of defied all logic."

Byron Shire Mayor Simon Richardson said booming house prices were a double-edged sword.

"If you're in the market in Byron it's great, if you're trying to get in it's less great," Mr Richardson said.

"But on a more important level is [that it's] putting incredible pressure on locals to stay here.

"We are still in the lowest 20 per cent of social disadvantage … there are massive amounts who are struggling from the huge homelessness problems to those who are really struggling to stay in Byron."